Saudi warehouses hit 98% occupancy amid industrial boom
Saudi Arabia's industrial and logistics property market is approaching full capacity, with warehouse occupancy reaching 98 per cent in Riyadh and 97 per cent in Jeddah, according to a new market review published by Knight Frank on Tuesday.
The property consultancy's Saudi Arabia Industrial and Logistics Market Review shows the Kingdom's push towards becoming the Middle East's leading industrial hub is driving rapid growth in the sector, with 1,346 new industrial licences issued in 2024 and capital investment in newly licensed factories reaching SAR 50 billion.
Warehouse space in Riyadh has seen the Kingdom's steepest rental growth, with average rates jumping 16 per cent year-on-year to SAR 208 per square metre, while prime properties now command over SAR 250 per square metre. Some districts, including Al Masani, Al Bariah, Al Faruq and Al Manakh, experienced even sharper increases exceeding 20 per cent.
'Leasing activity remains strong across most of Riyadh's submarkets, with demand continuing to outpace supply despite elevated rents,' said Faisal Durrani, Partner and Head of Research for MENA at Knight Frank.
Jeddah's market showed similar trends, with average rents reaching SAR 238 per square metre and the Al Khomrah district maintaining its position as the city's dominant logistics hub, accounting for approximately 82 per cent of the port city's total warehouse stock.
The report identifies several drivers behind the sector's growth, including government initiatives like the National Industrial Development and Logistics Program (NIDLP), which aims to increase the transport and logistics sector's contribution to GDP from 6 per cent in 2021 to 10 per cent by 2030.
New Special Economic Zones (SEZs) and foreign direct investment reforms are also attracting international businesses, with significant deals struck in 2024 including partnerships between Saudi property developer Kaden and global logistics provider DB Schenker, as well as agreements involving GFH Financial Group, Panattoni Saudi Arabia, Arcapita Group Holdings, and Saudi firm Rikaz.
'Saudi Arabia remains a pivotal hub for global business expansion, with the Kingdom continuing to attract interest from around the world,' said Adam Wynne, Head of Commercial Agency at Knight Frank.
According to the report, the number of licensed factories in Saudi Arabia is projected to increase from 12,895 to 36,000 by 2035, with sustainability emerging as a major market driver as companies like Maersk and Agility Logistics pioneer green infrastructure initiatives.
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